Amazon’s ample cash reserves indicate that its acquisition spree is likely to continue
Amazon (AMZN) had roughly $31 billion in cash, cash equivalents, and marketable securities on March 31. The PillPack deal marked the first time in the company’s history when it spent more than $1 billion on buyouts for two straight years.
Amazon and its tech peers have plenty of cash reserves, which they put to use by resorting to acquisitions as they enhance their reach and domain expertise and generate revenue and earnings. Significant cash reserves coupled with growing interest in key technologies, such as AI, augmented reality, big data, and cloud technology, have pushed players to pursue strategic acquisitions.
Amazon is an overall leader in the cloud space
As the above presentation by Synergy Research shows, despite mounting competition in the cloud space, Amazon continues to be an undisputed leader in all geographic regions. It has a ~40% market share in the overall cloud space.
Amazon is followed by Microsoft (MSFT), which is the second-place player in all the regions except the Asia-Pacific region, where Alibaba has taken its place. Google (GOOG), Alibaba (BABA), and IBM (IBM) are the number three, four, and five players in the overall cloud space.
Amazon’s ample cash reserves ensure that it retains its dominance in the retail and cloud space by making diverse acquisitions to reach different audiences. Given the way Amazon has made diverse acquisitions to retain its dominance in the retail space, it’s very likely it will follow the same route to retain its hold on the cloud space.